Exercise 18.18(Ed. 3:16.17)

Mirror Industries laminating division, BrightShine, incurred the following costs and expenses in the last period.

Variable Fixed

Direct materials $200,000

Direct Labour 150,000

Factory overhead 70,000 $42,000

General, selling and admin 30,000 48,000

Totals $450,000 $90,000

During the period, BrightShine produced 300,000 units of laminated board, which were sold for $2 each. Mirror's investment in BrightShine was $500,000 and $700,000 at the beginning and ending of the year, respectively. BrightShine's weighted average cost of capital is 15 per cent.

Required

(a)Determine Vale's return on investment for the year.

(b)Compute Vale's residual income (loss) for the year.

(c)How many laminated boards did BrightShine have to sell during the year to break even?

(d)What was BrightShine's contribution margin for the year?